Dubai shares fell amid rising volatility as institutions increasingly attempt to turn a quick profit.
The Dubai Financial Market fell 1.97 per cent to a 14-session low at 1,606 points. The latest losses mean the DFM's General Index has declined for five straight sessions.
Brokers were braced for profit taking in key stocks yesterday following Sunday's late rally, but had hoped buying would continue early on. This did happen, but only for about 15 minutes to take the market to an intraday peak of 1,645 points, or eight point above its opening figure, before sellers took over.
"The market has been more volatile since the turn of the year," said Wadah Al Taha, a financial analyst.
"Over the past few days, there has been a clear change in the behaviour of institutional investors, from a medium to long-term perspective to a short-term outlook. They're increasingly speculating in the market.
"This means more volatility and less stability and so retail investors will be persuaded to operate on an even shorter time horizon, booking narrow profits whenever they can to try and stay ahead."
The continued low volumes mean the market is easier to influence and so institutions have been tempted to try moving stocks.
For example, one unnamed institution bought 18 million Arabtec shares on Sunday at its intraday low price, only to sell five million of these almost immediately as retail investors excitedly bought in to propel the company's share price abruptly upwards. It then plunged again today as the original buyers booked profits.
Meanwhile, Dubai's turnover fell by a quarter to Dh253 million as few buyers were tempted into the market.
Short-term traders helped Arabtec claim top spot for the second day running as Dh109m of the company's shares were offloaded following Sunday's minor gains.
Emaar also saw trading top Dh100m, while DFM claimed Dh89m, which means this leading trio accounted for 86 per cent of the total market turnover.
"Dividend announcements are imminent and this will differentiate stocks – at the moment there is little difference in the movement of stocks, with most following the same slight downwards trend," said Taha.
"Some people are trying to guess what dividends might be and are buying accordingly."
From a technical perspective, the DFM must reconquer 1,630 points to turn bullish in the short term, according to Shiv Prakash, a Mac Sharaf Securities technical analyst.
The index is in dangerous territory, but should avoid another collapse providing it stays above the critical support of 1,550, he said.
Markets may rebound
The UAE markets may rebound today, with global exchanges expected to surge on the inauguration of the new US President Barack Obama.
"This could spread to our markets, however illogical that may be," said Wadah Al Taha, a financial analyst. "The markets could recover some of the losses of the past two days in the rest of the week, but overall the trend remains flat and slightly down."
Arabtec falls 9.7%
Sunday's heroes faltered badly on the Dubai Financial Market yesterday.
Arabtec fell a near-maximum 9.7 per cent to Dh1.40, while investors' faith in Emaar proved short lived as property developer fell 2.22 per cent to Dh2.20, its lowest close since June 10, 2004.
The other blue chips also toiled, with market leader EmiratesNBD dropping 4.45 per cent to Dh3.43, while DFM Co fell 5.1 per cent to Dh1.11, its joint worst close since listing in March 2007. Dubai Islamic Bank also fell, dropping 3.24 per cent to Dh1.79 as Dubai banks showed little of the bounce enjoyed by their Abu Dhabi counterparts yesterday.
Du was a notable exception, rising 0.48 per cent to Dh2.07. Telecoms companies are typically seen as a safe haven by investors during economic strife because of the sector's predictable earnings and strong cash revenues.
Real estate offers the opposite outlook, investors seem to believe, with Union Properties joining an extensive casualty list after falling 4.41 per cent to Dh0.65, which is a new all time low, while Deyaar is teetering above a similar milestone after dropping 1.92 per cent to Dh0.51.
Shuaa Capital offered some cheer, rising five per cent to Dh1.05 to become Dubai's star performer yesterday, but this improvement must be taken in the context of the stock losing 88 per cent of its value in a little over seven months.
Losers outnumbered gainers 16:7.
Gulf General Investments also bounced back to climb 3.65 per cent to Dh4.25. Dubai's other gainers were little traded stocks such as Ekittatab and Al Firdous.